Insurance Companies Face Rising Liabilities Amid Disasters and Political Unrest

Nepali insurance companies are facing mounting liabilities, with total claims exceeding Rs 35 billion over the past year due to natural disasters and political movements. The recent floods and landslides triggered by heavy rainfall from October 3 to 5 are expected to add significantly to this figure, compounding the financial strain on the sector.

The floods and landslides have caused extensive damage to more than 30 hydropower projects, as well as commercial and private properties. According to Birendra Baidwar Chhetri, President of the Nepal Insurers’ Association, the total value of claims cannot yet be confirmed as loss assessments are still ongoing. “More than a dozen hydropower plants have sustained damage, which means claim volumes will be substantial,” Chhetri said, adding that “sufficient reinsurance arrangements will help prevent excessive pressure on individual companies.”

Preliminary data from the Independent Power Producers’ Association, Nepal (IPPAN), show that 17 operational hydropower projects with a combined capacity of 180 MW and another 15 under construction have been affected by the floods.

According to the Nepal Insurance Authority (NIA), insurers received claims worth over Rs 16.5 billion following the 2015 earthquake, and another Rs 16 billion during the COVID-19 pandemic. More recently, companies processed claims worth Rs 12.27 billion related to last year’s floods and landslides, Rs 450 million due to property damage during the royalist movement in Tripureshwar last March, and Rs 985.9 million from the Lhendekhola floods in Rasuwa this July.

The “Gen Z Movement” alone led to 2,988 insurance claims amounting to Rs 23.39 billion as of the first week of October. Combined with recent natural disasters, total claims within a year have reached approximately Rs 35 billion, and are expected to climb further once the latest flood-related damages are processed.

Nepal currently has 37 insurance and reinsurance companies in operation, including 14 life insurers, 14 non-life insurers, four micro non-life insurers, three micro life insurers, and two reinsurers.

Chhetri emphasized that risk is inherent to the insurance business. “Insurance exists precisely where risks are high,” he said. “Companies cannot avoid risks, though premium rates may vary depending on the level of exposure.”

In Nepal, most individuals purchase insurance only when required by law or to obtain bank loans, meaning voluntary coverage remains limited. However, after the Gen Z Movement damages, the government announced plans to insure state-owned assets as well. Industry experts believe that disasters and recent losses may increase public awareness about insurance and ultimately expand the sector’s market reach.